What Are My Investment Options?

by Asha Ritu

Have you always dreamt of buying a car or a home in one or two years? Or do you imagine yourself vacationing at luxurious destinations? Or are you the kind of person who likes to keep your finances secured for your future life surrounded by loved ones?

Sometimes, even when we have a lot of money in our bank account we are not sure what to do with it. Most of us like to experience the joy of travelling all over the world and don’t want to accrue a big loan or credit at the end of the vacation.

If any of these situations seem familiar to you then you would certainly want to grow your savings and wealth. Also, if you like working smart instead of working hard, then you would want to increase your wealth by thoughtful proactive planning rather than just leaving it in a bank account accumulating only interest or worse, in a safe locker, accumulating dust.

So, What Should You Do?

Although just keeping your hard-worked money simply in a bank is by no means a bad option compared to just storing it in a house, there are so many other creative ways today to save and increase that money. It can be invested into any organization which is either public or private and these companies then use that pooled-in money from all the investors to either invest it in a business or return it into the pool for the use of other profit-making enterprises. The profits made using the investors’ money will be shared with you in the form of returns to your investments.

It’s time to welcome you into the world of investments!

Let’s look at your short-term and long-term investment options.

Short Term Investments

In this type, you keep your money for a short time period -anywhere up to 5 years. You can expect to take that money back with returns that are low, medium or high depending on similar risks that occur due to market rate fluctuations. Short term investments are generally low risk and low return or medium risk and medium return investment plans. Some examples of this type are:

Fixed Deposits (FD)

Fixed deposits are also called bonds in India, which is a financial contract with a bank or a non-bank finance company where we can deposit a sum of money into an account for a fixed period before which it cannot be withdrawn till the date of maturity along with interest.

Recurring Deposits (RD)

Recurring deposits is where you can deposit a fixed amount of your income into that account and earn interest for that amount.

Liquid Mutual Funds

Liquid mutual funds are debt-oriented schemes. You can park your surplus funds in a liquid mutual fund and earn low-risk returns in the short to medium term.

Sweep in FD  

Under the sweep-in facility, once the balance in a bank account crosses a certain threshold set by you, the excess amount is automatically converted into an FD. Under your instructions, you can specify the amount you want to sweep into a fixed deposit and link it to either the savings or current account. The biggest advantage of sweep in facility is that you can make a withdrawal from such fixed deposits for any emergencies, without affecting your savings or even breaking the deposit amount. You will only lose the interest on the swept amount but will continue to earn interest on the full fixed deposit amount.

The great thing about short-term investments is that your money can be liquidated at any point in time, thereby your money is more accessible to you.

Remember, that short-term investments should primarily be done with the intent of capital preservation rather than for wealth creation.

Long Term Investments

These are the type of investments where you can deposit money into a financial organization for a minimum of one year and a maximum of many years after which you can decide to either keep the money in the same account or withdraw your money along with any returns of profit. Or you could even sell it if it’s in the form of an asset especially in the case of real estate. Long term investments are usually medium risk or high-risk investments with medium or high returns.

Some examples of these types of investment are:

Stocks

Most of us are familiar with commonly spoken terms such as stocks in which one buys and sells their shares of a registered company in the stock market.

Mutual Funds

Mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities managed by a professional financial management company. Large-cap mutual funds are those where the funds are invested in companies with large market capitalization. A SIP (Systematic Investment Plan) is a good way to invest in mutual funds where small sums of money are invested in regular intervals.

ETFs

ETFs or exchange-traded funds are in many ways similar to mutual funds and are also listed on stock exchanges and traded throughout the day.

Real Estate

Buying and selling a property or real estate is also an excellent option where the growth and development of an area dictate the value of the land or property and is considered a long term investment.

Robo Advisors

Robo advisors are digital platforms that provide automated, algorithm-driven financial planning services with little or no human supervision.

So those were some of the investment options you have and with a quick search on the internet, we’re sure you can find an investment tool that works for you. Growing your wealth is an exciting journey filled with ups and downs, so make sure you’re patient and you invest in line with your financial goals.

Sources:

https://www.policybazaar.com/life-insurance/investment-plans/articles/top-10-short-term-investment-options/

https://fintrakk.com/5-best-long-term-investment-options-in-india/

https://www.Investopedia.com